Global Pharma Looks To India Final PDF

Pharmaceuticals and Life Sciences
Global pharma looks to India:

Prospects for growth
Table of contents
Introduction 03

Background 04
A fast growing economy
An expanding pharmaceutical market
Government-provided healthcare improving, but private healthcare dominates
Domestic market overview 09

Background
Consolidation underway, despite challenges
Contract manufacturing
Vaccines
Over the counter market holds significant potential
Reaching the untapped rural market
Growing Research & Development 15

Overview
Clinical trials
Biotech and biosimilars on track for growth
Other growth areas 20

Bioinformatics
Stem cell research
Medical devices
Global Pharma’s evolving business models and options in India 23

Background
Export-oriented business (Contract Research and Manufacturing Services)
Licensing
Franchising
Joint ventures
Wholly-owned subsidiaries
Practical concerns 27
Infrastructure
Tax environment
Counterfeiting
Intellectual property
Conclusion 30
Related reading: Pharma 2020 31
References 32
Acronyms 38
Introduction
The pharmaceutical industry’s main promise, either as places with untapped Indian companies have also started
markets are under serious pressure. demand for effective drugs or as entering into the realm of R&D; some of
North America, Europe and Japan jointly suitable areas for conducting research the leading local producers have now
account for 82% of audited and and development (R&D) and/or clinical started conducting original research.
unaudited drug sales; total sales trials. In this paper we shall examine the India has the world’s second biggest
reached US$773 billion in 2008, opportunities available in India. pool of English speakers and a strong
according to IMS Health. Annual growth system of higher education, so it should
in the European Union (EU) has slowed India’s population is growing rapidly, as be well-positioned to serve as a source
to 5.8%, and sales are increasing at an is its economy – creating a large middle for research talent. A new patent regime
even more sluggish rate in Japan (2.1%) class with the resources to afford provides better protection of intellectual
and North America (1.4%).1 Impending Western medicines. Further, India’s property rights, although some issues
policy changes, promoting the use of epidemiological profile is changing, so remain. Clinical trials can also be
generics in these key markets are demand is likely to increase for drugs conducted here much more cost-
expected to further dent the top- and for cardio-vascular problems, disorders effectively than in many developed
bottom-line of global pharma majors. of the central nervous system and other nations, and some local companies are
The industry is bracing itself for some chronic diseases. Together these factors beginning to develop the required
fundamental changes in the mean that India represents a promising expertise. All of these factors add up to
marketplace and is looking at newer potential market for global a strong case for partnering with Indian
ways to drive growth. pharmaceutical manufacturers. companies around R&D, including
clinical testing.
Further, higher R&D costs, a relatively More than that, India has a growing
dry pipeline for new drugs, increasing pharmaceutical industry of its own. It is Further, healthcare has become one of
pressure from payers and providers for likely to become a competitor of global the key priorities of the Indian
reduced healthcare costs and a host of pharma in some key areas, and a Government and it has launched new
other factors are putting pressure on the potential partner in others. India has policies and programmes to boost
global pharmaceutical companies. considerable manufacturing expertise; local access and affordability to
Pharma companies are looking for new Indian companies are among the world quality healthcare.
ways to boost drug discovery potential, leaders in the production of generics
reduce time to market and squeeze and vaccines. As both of these areas Global players in the pharma industry
costs along the whole value chain. become more important, Indian cannot afford to ignore India. The
producers are likely to take a large role country, many predict, will be the most
How can industry leaders best face on the world stage – and potentially populous in the world by 2050. India will
these challenges? Analysis by partner with global pharma companies make its mark as a growing market,
PricewaterhouseCoopers (PwC) shows to market their wares outside of India. potential competitor or partner in
that several regions offer considerable manufacturing and R&D, and as a
location for clinical trials.
Global pharma looks to India: Prospects for growth 3

Background
A fast growing economy Figure 1: India is forecast to grow by at least 5% a year for the next 41 years
The Indian economy is worth about

US$1,243 billion and rapidly getting
bigger.2 Real GDP growth reached 9%
in the year to March 2008.3 The rate of
increase has since slowed down due to
the global financial crisis; in the year to
March 2009, growth eased to 6.7%.4
Even so, most forecasters believe that
India will continue to show robust
growth over the long-term; a survey of
professional forecasters performed for
the Reserve Bank of India (RBI)
anticipates growth improving to 6% in
the year ending March 2010,5 and
expects robust growth of 7.8% p.a for Source: BRICs and Beyond, Goldman Sachs, November 2007.
the next ten years.6 Previous forecasts
such as those of Goldman Sachs
suggest that India will be the only
emerging economy to maintain such an Figure 2: India is shifting from agriculture to services
outstanding pace over the longer term,
i.e. to 2050 (see Figure 1).7
Two factors underlie this favourable

outlook: India’s demographic profile and
a robust services sector. India’s
population is currently just over 1.1
billion and projected to rise to 1.6 billion
by 2050 – a 45.5% increase that will see
it outstrip China as the world’s most
populous state.8 India has also utilised
its strengths in IT to become a major
offshore business services provider, in
marked contrast with most of Asia,
which has relied on manufacturing for
its recent growth. As a result, services Source: Reserve Bank of India Annual Reports.
now account for 64.5% of India’s GDP
(see Figure 2).9 While a strong services
sector heralds well for continued
economic prosperity, it also suggests
why India looks to be important for
research and development as well as
drug manufacture; the country’s
experience delivering on outsourcing
opportunities in other knowledge-critical
areas such as IT should serve it well in
its bid to offer such services in pharma,
biotech and related areas.
4 PricewaterhouseCoopers
An expanding pharmaceuticals drugs by virtue of the Drugs Price
market Control Order (DPCO), supervised by
the National Pharmaceutical Pricing
India’s pharmaceuticals industry looks
set for a solid long-term growth. It
Authority (NPPA). The 347 price-
controlled drugs included in 1979 were
The bottom line:
already ranks fourteenth in the global reduced to 143 in 1987.16 At present, 74 Increased buying
league table, with sales of almost bulk drugs are covered under the
US$19 billion in March 2009.10 However, DPCO.17 The Government’s draft power and
PwC estimates that it will rise to pharmaceutical policy in 2006 sought to
approximately US$50 billion by 2020 – expand the scope of essential drugs epidemiological
a 163% in the space of eleven years.11
Indeed, in our report, Pharma 2020:
and evoked a sharp reaction from the
industry. They argued that it would
changes should
The vision, we anticipate that India will
be one of the industry’s top 10 markets
adversely affect R&D activities in India,
as companies would stay away from
spur dramatic
by 2020. investing in new drugs. To date, no growth in sales
further action on the proposed policy
This growth will be driven by the changes have been taken and it volumes, but India
expanding economy and increasing per currently looks unlikely that the DPCO
capita GDP. In 2008, India’s middle will be expanded. remains a price-
class constituted 13% of the
population, according to the National The Indian Government’s Department of
sensitive market.
Council of Applied Economic Pharmaceuticals has also initiated
Research.12 While this remains a fairly operations for a peoples’ medicines
small proportion of the total population, shop, called ‘Jan Aushadhi,’ in various
it represents a substantial increase from locations. These shops sell generic
a mere 3% in 1995.13 If the economy medicines at much cheaper rates
continues to grow faster than those of than the price of corresponding
the developed world and the literacy branded medicines.18
rate keeps rising, around a third of the
population (34%) is expected to join the Some multinational pharma companies
middle class in the near future.14 While are already taking measures to reach a
these consumers still earn substantially larger patient population by reducing
less than their US or European drug prices and increasing affordability.
counterparts, they are rapidly acquiring One example: Merck & Co. has
the buying power necessary to afford launched differential pricing through
modern healthcare, particularly if Januvia, its anti-diabetic drug, which is
purchasing power parity is considered. priced at approximately US$1 per dose
One source estimates that at least 60 in India – a fifth of its price in the US.19
million Indians – a market as big as the Indian companies like Biocon have also
UK – can already afford to buy Western followed a similar pricing strategy.
medicines.15 Aggressive pricing Biocon has launched its monoclonal
strategies will be necessary, however, to antibody BIOMAb EGFR at one-fourth
make in-roads into India’s price- of its price in the global markets.20
sensitive market.
It’s also likely that India will require
India’s federal Government currently different types of drugs in the future.
mandates price controls on essential Like almost every other emerging
drugs, however, these are under review. economy, India is experiencing
Price controls are carried out on certain epidemiological changes. Thanks to

greater affluence and better hygiene, companies. It currently represents about
India’s insulin dependence the population is ageing; by 2028, an 8% of the global drugs market by
estimated 199 million Indians will be 60 volume and only around 1% by value,23
The number of Indians with or older, up from about 91 million in but the Indian consumer’s rapidly
diabetes is projected to reach 2008.21 Besides that, it has the largest increasing purchasing power and the
73.5 million in 2025. The direct pool of diabetic patients, for example, country’s changing epidemiological
and indirect costs of treating with more than 41 million people profile could jointly improve its price/
such patients are currently about suffering from the disease (see sidebar volume mix.
US$420 per person per year. If on India’s insulin dependence).22 The
these costs remained the same
pattern of demand for medicines is In order to get drugs to consumers at
as they are now, India’s total
bill for diabetes would be about shifting accordingly. In 2001, anti- the right price, though, improvements to
US$30 billion by 2025. But as infective and gastrointestinal drugs and local supply chains will need to take
its economic wealth grows and vitamins accounted for 50% of the place. One source estimates that
standards of care improve, domestic market. By 2012, they are logistics comprise 45-55% of the costs
treatment costs are likely to rise. expected to account for just 36%. in the Indian pharmaceutical supply
The US spends an average Conversely, drugs for cardio-vascular chain from factory to shelf.24 India has
US$10,844 per year on each problems, disorders of the central historically had a pharma supply chain
patient with diabetes. If India’s nervous system and other chronic with a number of stops between the
per capita expenditure rose to diseases will account for 64% of initial production and final consumer.
just one-tenth of this level, the total sales, up from 50% in 2001 The arrival of Goods and Services Tax
total cost of treating all patients (see Figure 3). (GST) may prove to be a strong
with diabetes would be US$79.7 incentive for greater streamlining, as
billion by 2025. The value of
These factors help to explain why India such middle men could potentially add
prophylaxis in India alone would
thus be substantial; preventing is expected to be among the top substantially to the final cost of
10% of the population from markets for many pharmaceutical medications in a price-sensitive market.
developing diabetes would save
nearly US$8 billion a year. Figure 3: India’s therapeutic needs are changing
Source: PricewaterhouseCoopers, 100%

Pharma 2020: The vision
9% Pain/Analgesics,
20% 21% Gynaeclogical &
10% Dermatology
80%
12% 9% 9% Respiratory
11% 11% Gastrointestinal

14%
60%
9% 8% Vitamins/Minerals
24%
18% 17% Anti-infectives
40%
5% 6% Neuro/CNS
5%
8% 10% 10% Cardiovascular
20%
3% 5% Antidiabetic
4%
15% 13% 13% Others
0%
2001-02 2006-07 2011-12
Source: ORGIMS Data, Crisil Research, Pharmaceuticals: Review Indian formulation market (2008)
Further, the consolidation of the pharma workers without access to hospitals or
industry and emergence of pharma retail pharmacies (see Table 1).26 Many of
chains are likely to lead to more the poor rely exclusively on alternative
concentration in the supply chain. The forms of treatment such as Ayurvedic The bottom line:
increasing requirements posed by some
formulations like biologics, which
medicine27, Unani28 and Acupuncture.
India’s healthcare
require advanced expertise such as the
ability to maintain the cold chain and
The Indian Government has made the
provision of healthcare as one of its
system is
avoid shocks during the distribution
process, will also play a role. Inventory Table 1: India healthcare facilities
struggling to
reduction and the reduction of order
Doctors 60 per 100,000 people29
meet the needs
cycle time will be key objectives for
companies looking to optimise their Nurses 80 per 100,000 people30 of its vast
Pharmacies 367,000 (urban),
supply chains in order to offer their
drugs at affordable prices.25 183,000 (rural)31 population, but
Hospitals 30,000 (67% public, government
Government-provided 23% private)32
healthcare improving, but Hospital 1.7 million
programmes and
private healthcare dominates beds (one per 1,000 people)33 reforms in the
Health 171,687 (including
The Indian Government is currently
in the throes of a much needed
centers 145,272 sub-centres health insurance
with basic facilities)34
programme to reform the health care industry should
system. After years of under-funding, Sources: World Health Organisation (2008)
most public health facilities provide only Modern Pharmaceuticals (December 2008);
Health System in India: Opportunities and
improve the
basic care. Moreover, three quarters of
medical facilities are located in urban
Challenges for Improvement (July 2005)
Expresspharmaonline.com (2007); and situation.
World Health Organisation (2007).
areas, leaving the majority of rural

key priorities. It launched a new policy 2010-11 also allocated US$ 2,920 who do have some insurance, the
to build more hospitals, boost local million under the National Rural Health main provider is the Government-run
access to healthcare and improve Mission (NRHM), an increase of 15% General Insurance Company (GIC),
the quality of medical training, and over the previous year.40 along with its four subsidiaries, but
promised to increase public expenditure private insurance is on the rise. The
on healthcare to 2-3% of GDP, up from However, critics suggest that the health insurance market in India has
a current low of 1%.35 The 2008-09 authorities are doing too little too undergone liberalisation in recent years.
Union Budget highlighted a five year late, and those who can afford it have Further, the Insurance Regulatory
tax holiday for setting up hospitals turned to the private sector instead. In and Development Authority (IRDA)
anywhere in India, especially in tier-2 2008, fee-charging private companies eliminated tariffs on general insurance
and tier-3 towns.36 The Government accounted for 80% of India’s US$48.6 as of January 1, 2007, and sales have
further allocated US$51 million for a billion expenditure on healthcare, been going up accordingly. In 2007-08,
new health insurance scheme to provide while central and local Government almost US$1.2 billion worth of medical
a health cover of US$745 for every accounted for only around 20%. Private insurance policies were sold in India –
worker (including his/her family) in the firms are now thought to provide about up from US$160 million in 2001-02.42
unorganised sector falling below 80% of all outpatient care and as much But widespread use of health insurance
poverty line (BPL),37 which was as 55% of all in-patient care.41 could take many years, not least
increased to US$76 million in 2009-10 because the insurance companies lack
budget.38 The recent budget (2010-11) Some costs for care may be covered the data they require to assess health
extended the coverage to another 20% by the insurance industry in the future, risks accurately and the only products
of the Indian population covered by the although the current lack of general they sell work on an indemnity basis
NREGA (National Rural employment coverage remains a challenge. In 2007, – that is, they reimburse the patient
Guarantee Act) programme, who have only 11% of the population had any after he or she has paid the healthcare
worked for more than 15 days during form of health insurance coverage. provider’s bill, making such policies
the preceding financial year.39 Budget For the small percentage of Indians less attractive.
Domestic market overview
Background 2005 (see Intellectual Property Rights

on page 29), so market strategies are
India’s domestic pharmaceutical changing and some generics
industry was worth around US$11 billion producers are looking further afield The bottom line:
in March 2009 and PwC estimates it
will rise to approximately US$30 billion
for new markets.
2008 saw M&A
by 2020.43 The domestic market is very
fragmented; more than 10,000 firms
India’s manufacturing clout has made it
a massive threat to established generics
in the pharma
collectively control about 70% of the firms – India now produces more
than 20% of the world’s generics.46
sector in India
market.44 Many of the local players
are generics producers specialising Moreover, around US$70 billion worth more than
in anti-infectives. In 1972, the federal of drugs are expected to go off patent
Government passed a law allowing local in the US over the next three years, double against
producers to manufacture drugs that
were still under patent, as long as they
and India is well-positioned to take
a substantial share of the resulting the previous
used different processes.45 The lack
of a patent system that conformed to
new generics markets.47 Indian
companies today account for 35% of
year, despite
international standards helped spawn the Abbreviated New Drug Application
(ANDA) approvals granted by the US
the challenges
a domestic industry that excelled in
reverse engineering novel drugs and Food and Drug Administration (FDA) posed by the
launching copycat versions at home and until February 2009.48 India’s generic
in other emerging markets. Wholesale houses are now entering into strategic global recession.
marketing of generic versions of drugs alliances with global pharma companies
patented since 1995 and still under to strengthen their generic portfolio
patent has not been permitted since and jointly market these drugs globally,

for example Pfizer has entered into largest active pharmaceutical ingredient was second among industry sectors in
alliances with Aurobindo and Claris to (API) manufacturers globally. terms of deal value at US$5.57 billion,
market their drugs in offshore markets. marginally below the Telecommunication
Similarly, GlaxoSmithKline (GSK) has Cipla is another company with sector which had total transactions worth
acquired exclusive rights for Dr. Reddy’s revenues of over US$1.1 billion, 56% US$5.78 billion in 2008. In the same year,
Laboratories’ (DRL) pipeline of over 100 of which come from outside India.51 India’s largest pharma company, Ranbaxy
generics for sale in emerging markets. It is one of the largest manufacturers Laboratories, was acquired by Japan’s
In addition to partnering with global of antiretroviral drugs in the World.52 Daiichi Sankyo. This was a landmark
pharma, some Indian companies are In 2007, an Avesta-Cipla joint deal in the Indian pharma history, where
also setting up their own marketing venture acquired Siegfried Biologics, Ranbaxy’s promoters relinquished
subsidiaries abroad. a Switzerland based company, to their entire stake to the acquirers. The
manufacture US FDA and European transaction paved the way for other
India’s pharmaceutical exports totalled Medicines Agency (EMEA) compliant promoters to consider whether they are
around US$8 billion in 2009 and PwC biopharmaceuticals for the global better served growing their businesses
estimates they will rise to approximately markets.53 Meanwhile, Lupin is the independently or by realigning with other
US$20 billion by 2020.49 Over the biggest producer of Lisinopril, an API partners who may be able to help them
past several years companies such used in the treatment of hypertension.54 to take their businesses to the next level
as DRL, Cipla and Lupin have grown Lupin’s acquisition of Multicare of growth.
internationally in their own right as well. Pharmaceuticals of Philippines has
Other Indian pharma companies like propelled it into position as a top In 2008, the world went through a credit
Glenmark Pharma, Orchid and Aurobindo generics player in the Phillipines.55 crunch, followed by a prolonged global
also have wholly owned subsidiaries in The deal represented Lupin’s sixth economic downturn in the last quarter of
different parts of the globe. acquisition since 2008. 2008 and throughout 2009, both of which
have also had a negative impact on the
DRL has grown from a small firm into Consolidation underway, despite Indian pharma industry. The impact of
an international business with annual the downturn, coupled with volatility in
challenges
sales of more than US$1.4 billion, the Rupee, depleted the financial
about 84% of them outside India.50 The position of several Indian pharma
company’s acquisition of Germany’s The Indian pharma industry as a whole is companies, especially those which had
Betapharm positioned it as one of the moving on a consolidation path. The year substantial foreign borrowings on their
largest generics companies in the world; 2008 saw 57 mergers and acquisitions,56 balance sheets.
it is currently one of the largest suppliers a 128% increase over the previous year.57
of drugs to the US. It is also one of the Total investment in pharmaceutical, Sustaining acquisition heavy structures
healthcare and biotechnology sectors became increasingly difficult in 2008.
Some Indian companies which made Further, in 2009 another landmark deal
significant acquisitions were now finding was announced, with sanofi-aventis
it difficult to integrate their foreign acquiring controlling stakes in the
acquisitions with the Indian operations leading Indian vaccine manufacturer The bottom line:
due to severe pricing pressures.
Legislative reforms imposed in
Shanta Biotech.
2008 saw M&A
acquisitions’ home markets also had an
impact. Further, some companies
Elsewhere we discuss some of the
strategies that Indian companies
in the pharma
booked losses on foreign currency
convertible bonds (FCCBs), negatively
employed to stay afloat during the crisis,
including greater focus on leveraging
sector in India
impacting overall profitability. their strengths in newer structures like more than
Contract Research & Manufacturing
Nonetheless, investor confidence has Services (CRAMS), biotech & clinical double against
remained fairly stable and deals continue
despite challenges. The average deal size
trials, and increasing penetration in
rural markets. the previous
in 2008 was around US$15.34 million,
20% higher than US$12.82 million in
year, despite
Contract manufacturing
2007. The pharma sector had 57 deals,
of which 17 deals were domestic. There
the challenges
Contract manufacturing is a strong
were a total of 22 pharma private equity segment of the domestic market. Indian posed by the
(PE) deals worth US$337.41 million.
Private equity players and investment
firms have several advantages over their
Western rivals. The expertise gained in
global recession.
funds played an active role in the deal manufacturing generics through reverse-
market. Some of the investments were engineering has helped some companies
those of Citi Venture and Everest Capital streamline the process for getting
of about US$23.6 million in Nectar manufacturing up and running. Costs are
Lifesciences.58 Similarly, Kotak Private very competitive; indeed, they are only
Equity Group, an arm of Kotak Mahindra two-fifths of those involved in setting
Bank, invested about US$10 million up and running a new manufacturing
in Intas Biopharmaceuticals.59 Gujarat facility in the West.61 They can operate
Biotech Venture Fund invested US$12.7 on significantly lower margins, given
million in Century Pharmaceuticals and their low development and labour costs.
SME Growth Fund invested US$7 million Currently their key area of strength in
in Centaur Group.60

outsourcing is the manufacture of APIs. expected as patents expire over the next
Some Indian pharma companies could five years.65
probably benefit significantly by moving
The bottom line: towards specialty APIs in the future. Some Indian manufacturers are also now
Indian pharma The Indian contract manufacturing

incorporating Lean Manufacturing and
Six Sigma principles to help them boost
companies have segment was worth around US$605
million in 2008 and is expected to reach
operational efficiency and further improve
quality, while facilitating compliance.66
solid expertise around US$916 million in 2010.62 The
US FDA has already approved over Vaccines
in contract 100 manufacturing sites – more than
in any country except the US (see
manufacturing Figure 4).63 Among six offices that the
Vaccines are another prominent area
of growth. India is one of the largest
and recent US FDA has overseas, two are located
in India, in Delhi and Mumbai.64 All
vaccine producers in the world, with
many new vaccines set to be launched
scrutiny around domestic producers are also obliged to
comply with India’s Good Manufacturing
in the next five years. The vaccines
segment was around US$780 million in
quality issues is Practices, under Schedule M of the
March 2008, growing at a compounded
Drugs and Cosmetics Act, 1940.
driving significant annual growth rate (CAGR) of 15%.67
India currently exports vaccines to
Indian manufacturers are currently facing
improvement in some scrutiny around quality issues. In
about 150 countries. It also meets
around 40-70% of the World Health
manufacturing 2009, the US FDA took action against a
few Indian companies after conducting a
Organisation (WHO) demand for the
DPT (diphtheria, pertussis or whooping
standards. series of inspections and issuing warning
letters against these drug makers.
cough, and tetanus) and the BCG
(bacille calmette-guérin) vaccine against
tuberculosis, and almost 90% of its
While such sanctions clearly pose
demand for the measles vaccine.68
significant challenges, some analysts
The Serum Institute of India, founded
see an opportunity as well. Indian
in 1966, is a leading player which
companies are aggressively improving
produces and supplies low-cost, life-
their manufacturing standards in
saving vaccines for children and adults.
response, and are therefore likely to
The Institute is also the world’s largest
be better positioned to take advantage
producer of measles and DPT vaccines.
of the upsurge in generics production
Figure 4: India has more US FDA-approved manufacturing plants than any country
except the US
Source: Crisil Research, Bulk drug exports to scale up in the regulated markets (December 2008) for India;
ICICI Securities, Indian Pharma Sector: Sector Update (December 2008) for Italy, China, Spain, Taiwan, Israel
and Hungary.
It has been commissioned by the WHO prescription drugs (or OTC drugs). OTC
to develop vaccines against the latest proprietary drugs are also regulated by
strain of H1N1. An estimated two out the Drugs and Cosmetics Act and the
of every three immunised children in Drugs and Cosmetics Rules. However, The bottom line:
the world have received a vaccine
manufactured by the Serum Institute.69
as they do not require a drug license
they can be sold by non-chemists, so OTC sales
As the risk of global pandemics
grows, so do potential markets for
sales channels are more extensive. As
discussed, much of India’s population
are on the
new vaccines. relies on self-medication, and the increase, offering
purchasing power of the middle class
OTC market holds significant is growing. These trends should drive opportunities
growth in cough and cold formulations,
potential
gastrointestinals, analgesics, and to achieve high
Globally, over-the-counter (OTC) drug
dermatologicals. Only a few OTC
active ingredients, e.g. acetylsalicylic volumes and
sales have been increasing in recent
years. This trend is driven in part by
acid and ephedrine and its salts, fall
under the current DPCO price control.
enhance pharma
aggressive efforts of global pharma
companies to leverage the brand equity
Counterfeits of popular OTC drugs are brands in India.
however a major issue.
that major products have attained
during the patent period. Other major Indian consumers are also placing more
winners in the OTC category include emphasis on prevention and wellness,
products where patients continue to buy which should contribute to continued
particular remedies following an initial increases in sales of OTC vitamins
doctor’s prescription. and minerals. The market is already
growing strongly. Profitable OTC drugs
OTC drugs may have even stronger for some of India’s largest pharma
potential in India. An increasing number companies include artificial sweeteners,
of Indians are already dipping into their emergency contraceptive pills and
own pockets to buy OTC drugs. The nutritional supplements.
OTC market was worth about US$1.8
billion in 2009 and is expected to grow The popularity of Ayurvedic therapies
at 18% a year to reach about US$3 should also contribute to the sales of
billion in 2012.70 The Government is related OTC formulations. Some of
now considering plans to expand the the leading OTC brands in India are
list of drugs which can be sold outside registered as ‘Ayurvedic Medicines’
pharmacies, since many common because of their plant-based natural
household remedies are more difficult active ingredients. There are no price
to obtain in India than in other controls on ‘Ayurvedic Medicines’.
developing countries. An expansion of
the list would substantially increase Some global pharma companies are
the potential market opportunity in already launching OTC products in India
this segment. or buying OTC products. Novartis India
launched Calcium Sandoz as an OTC
Although the term ‘OTC’ has no legal supplement in 2000 and has now come
recognition, all the drugs that are not out with Otrivin nasal drops in a spray
included in the list of ‘prescription form.71 Pfizer has launched Listerine,
only drugs’ are considered as non- Benadryl, Caladryl and Benylin in India,

which were later sold to Johnson and more lucrative and will continue to
Johnson.72 In the future, India may represent a focus for the industry,
also serve as a manufacturing location the untapped potential of Indian rural
The bottom line: for OTC products destined for other markets is now seen as the next volume
While urban markets. In August 2009, US-based
OTC manufacturer Perrigo announced
driver. Rising income levels leading
to more affordability, improving health
markets will the purchase of 85% of Indian contract
manufacturer Vedants. The company
infrastructure, and increasing incidence
of lifestyle diseases along with the use
remain the focus plans to shift some of its current of health insurance are fuelling the
production from facilities in Israel and growth in rural areas.
in the near-term, Germany to India by 2011.
Indian companies are devising a
getting treatment India’s regulatory framework permits number of strategies to increase rural
out to the 70% advertising for OTC products, and
consumers can buy them without a
penetration. For instance, Lupin has
a strong brand franchise in the anti-
of the population doctor’s prescription. However, a wider
distribution network will also boost the
infective, pain management, and
gastrointestinal segments – these three
residing outside growth of such products. Currently areas account for 40% of domestic
about half of OTC sales come from formulations sales. The company
of these areas chemists, while grocery stores and has a dedicated rural field force of
general stores account for over a third more than 300 people and is rapidly
represents the of the sales.73 Pharma companies are expanding it. Piramal Healthcare has
next volume also targeting post offices to sell OTC
drugs in rural India. This move could
also announced a new initiative to target
the mass market, focused on general
driver. substantially increase the access of
OTC drugs, especially in areas where
practitioners, to cater to rural markets.
Piramal plans to employ a field-force of
there are no pharmacies. approximately 800 people.
Reaching the untapped rural Companies looking to access rural

markets face many hurdles, including
market
lack of communication, language
barriers, high penetration of spurious
Although urbanisation continues, drugs, lack of adequate infrastructure,
around 70% of India’s population still such as marketing and distribution
resides in rural areas. As already noted, channels for niche therapeutic
the population residing in villages has segments in particular, poor storage
significantly reduced access to quality facilities, and insufficient sales
treatment and medicines. Many pharma personnel deployment. Global pharma
companies are thinking beyond larger companies eyeing rural markets will
cities and targeting rural sectors. need to forge alliances and partnerships
While urban markets are currently to overcome these obstacles.
Growing Research
& Development
Overview However India offers limited capabilities has formed an alliance with Eli Lilly. By
in preclinical and complex Biology selling developing and licensing rights
PwC estimates that India’s 10 largest research. Preclinical capabilities in for the US, Japan and Western Europe,
drug firms spent US$480 million on R&D India are limited to clinical trials in but retaining rights within emerging
in 2008. The bulk of this investment rodents and dogs, with almost none markets, some Indian pharmaceutical
went towards developing new for primates. The capabilities mostly companies are able to gain immediate
formulations, however R&D in the Indian reside with Indian pharmaceutical revenues, while retaining future access
pharmaceuticals industry is changing. companies, developed through in- to India’s growing domestic market.
The new patent regime means house R&D programmes – Government
companies need to be more innovative, involvement in this area is minimal. A number of Indian pharma companies
rather than relying solely on reverse- Some Government institutes do offer have spun off their R&D divisions
engineering existing formulations. The basic biology services, but the level of into separate units in order to scale
reliance on anti-infectives is also likely innovation generated by such facilities up resources and to attract focused
to lessen. As already noted, as the is fairly modest. Multinationals will investments. DRL started the trend
illnesses of affluence and age increase, need to partly/completely own or in R&D spin-offs in 2005. Piramal Life
the demand for many other types of share technology with available Indian Sciences, Piramal Healthcare’s R&D
pharmaceuticals will rise, and Indian Contract Research Organisations division, was recently demerged from
pharma companies need to begin (CROs) in order to achieve innovative the latter. Sun Pharma Advanced
transforming their portfolios accordingly. results. The Indian contract research Research and Ranbaxy Life Science
segment was estimated at around Research have also been demerged
India has widely acknowledged US$485 million in 2008 and is expected from their parent companies Sun
chemistry skills. Several leading to reach around US$1 billion in 2010.74 Pharma and Ranbaxy respectively.
domestic producers have begun to Some spin offs have faced difficulties
conduct original research into new Despite Indian pharma companies’ stemming from uncertain resources
chemical entities and novel drug growing expertise in later stages of and declining PE interest in research.
delivery systems. Amongst others, the R&D process, many of the drug Several companies are now seeking a
Ranbaxy has commenced phase-III candidates initially formulated in India collaborative approach towards drug
clinical trials for its new anti-malarial are likely to be further developed by discovery, in order to mitigate the
combination drug. Other companies are Western drug makers, because few risk associated with failure of a
looking to shift to clinical areas with a Indian companies can afford the high drug molecule.
growth opportunity, such as diabetes costs and failure rates associated
(see sidebar on India’s insulin with pushing a drug right through India’s R&D base is still small, but it has
dependence on page 6). Piramal Life the pipeline. Several Indian firms several advantages that should serve
Sciences has initiated phase-I trials of have already entered into research it well in the future. Some 70 million
a new experimental drug for diabetes- partnerships with multinationals; DRL people speak English75 – more than in
metabolic syndrome in Canada. DRL is and Torrent have joined forces with any other country except the US – and
conducting phase–III trials for its Type II Novartis, for example, while Ranbaxy it has an excellent tertiary education
diabetes drug. Other areas of innovation has formed alliances with GSK and system; every year, it turns out about
are also being explored; Biocon has 7 Schwarz Pharmaceuticals. Glenmark 115,000 scientists with Master’s
and Wockhardt has 10 new chemical has formed an alliance with Napo degrees, and 12,000 with PhDs.76 Many
entities in their R&D pipelines. Pharmaceuticals and Piramal Healthcare of these scientists have traditionally

gone abroad, but companies like successes in the global software and few India pharma companies for testing
Ranbaxy are now actively trying to IT services market. In this respect, new drugs without getting patients’
lure them back with the prospect of India offers one of the very few consent or for violating protocol.
opportunities for original research. examples of an emerging economy However, during the past few years
Salaries are also very much lower than that has managed to attract Foreign a number of big contract research
they are in North America or Western Direct Investment (FDI) in the area organisations have set up businesses
Europe. Wage costs within the Indian of high-tech software development, in India, including Quintiles, Omnicare,
pharmaceutical industry are about one- while successfully inserting itself as PharmaNet and Pharm-Olam. Most
third of those in developed countries.77 a competitive presence in the very of the multinationals, Novo Nordisk,
heart of Silicon Valley. Biotech, another sanofi-aventis, Novartis and GSK
To achieve its potential and convert knowledge-based sector, is now among them, have likewise started
these opportunities into global experiencing a similar boom. Drawing running clinical trials here – and some,
success stories, the Indian pharma on the success of IT enterprise parks, such as Pfizer and Eli Lilly, have been
industry requires the support and the Government also inaugurated the conducting tests locally for a while.
collaboration of all stakeholders, first phase of its first biotech-IT park
including the Government, academia – Bangalore Helix in June 2007. The In January 2005, the federal
and financial investors. Collaboration project is part of efforts to position Government amended Schedule Y
will be essential; but to date only a few India as a global hub for bioinformatics of the Drugs and Cosmetics Act to
Indian pharmaceutical companies have and biotech. make the rules on clinical trials more
partnered with academic institutes consistent with international practice.79
to carry out basic research.78 Such Clinical Trials The Health Ministry is planning to add
cooperations can help accelerate a new Schedule Y-1 to the Drugs and
the research process in some areas. Cosmetic Rules 1945 to further improve
India’s developing research skills are
Partnering with academia can also the situation.80 Early stage testing of
matched by its growing involvement in
help develop the sophisticated skills molecules discovered outside India is
clinical testing. The country historically
needed for high-level research. still restricted, but multinationals can
lacked the expertise to perform clinical
Pharma players who can leverage the now conduct trials where, previously,
trials because most companies only
research capability of academic and they could only conduct trials in any
tested different processes for producing
Government institutes, through mutually particular phase after completing the
copycat versions of Western products
beneficial collaborative models, will gain same phase of testing elsewhere.81
and the rules were quite lenient. Several
significant competitive advantage.
drug makers have also been caught
At present, though, the industry still
behaving unethically or even illegally.
Amongst emerging economies, India lacks a strong regulatory framework.
The Supreme Court and Drug Controller
has the unique advantage of its recent Good Laboratory Practices (GLP)
General of India (DCGI) have criticised a
certification remains a voluntary
process, although most Indian pharma to boost the Indian clinical trials market.
companies dealing with international Expectations are already high; some
clients or exporting to foreign regulated observers expect the market could
markets look to attain such certification. reach US$2 billion annually by 2012, up The bottom line:
The National Good Laboratory Practice
Compliance Monitoring Authority was
from just US$300 million in 2008.86
The strong anticipated growth reflects Insufficient
established under the Department
of Science and Technology in April
some of the attractions India holds
for this market. According to a study
regulatory
2002. While this was undoubtedly a
step in the right direction, there are
by Rabo India Finance, a subsidiary
of the Netherlands based Rabo Bank,
oversight is
still only about 33 GLP inspectors82 the huge patient population offers vast currently a barrier,
and about 12 GLP certified labs in the genetic diversity, making the country
country.83 In addition, the ruling on “an ideal site for clinical trials.” Further, however India’s
whether a trial design violates ethical
principles is left to individual local ethics
many people are “treatment-naïve” and
relatively easy to access. The United many advantages
committees. There is no central register
of Ethical Committee decisions. Better
Nations reports that around 30% of the
population lives in urban areas;87 and
- overall costs
infrastructure for regulation, ethics
review and monitoring is required.84
over 67 million people live in India’s six
biggest cities alone (see Table 2).
are only 50%
of comparable
Registration of new clinical trials is now
mandatory on the Indian council of
Table 2: Urban India US-based
Population
medical research's (ICMR) web based
clinical trials registry. The government (Data in ‘000) programmes
plans to make inspection of clinical trial
sites an ongoing activity by increasing
City 2005 2010
- should spur
Bangalore 6,465 7,229
the number of inspectors, training them
for site inspection and developing
Kolkata (Calcutta) 14,282 15,577 dramatic growth
a checklist for audits. Further, the Chennai (Madras) 6,918 7,559 in clinical testing
government is also working on a Delhi 15,053 17,015
proposal to register CRO’s in India.85 Hyderabad 6,117 6,761 in the next 2-5
This type of more rigorous regulatory
Mumbai (Bombay) 18,202 20,072 years.
Source: United Nations, World Urbanization Prospects
oversight, together with increasing (2007)
interest from foreign firms, should help

The ratio of doctors to patients – at service tax. Table 3: India’s top 10 biotech firms
60 per 100,000 people – is also
Revenues
relatively high, although the quality Biotech and biosimilars on track (US$ million)
of medical training is not as good as
for growth Company 2008–09
it is in some other emerging nations.
Serum Institute of India 242.12
The country’s 289 medical colleges
are over subscribed and the emphasis India is home to a small biotechnology Biocon 198.29
is on quantity rather than quality.88 industry, based largely in Karnataka, Panacea Biotec 129.79
These problems are compounded by with other clusters of activity in West
Rasi Seeds 81.63
lack of experience. India has only 500 Bengal, Maharashtra, Andhra Pradesh,
Hyderabad, Kerala and Ahmedabad. In Nuziveedu Seeds 79.11
to 1,000 investigators in the country
2008-09, the sector generated sales of Novo Nordisk 71.72
as compared to 50,000 in the United
States, suggesting that most companies US$2.64 billion93 representing a CAGR Siro Clinpharm 60.86
would need to make a major investment of 26%, but both the federal and state Novozymes South Asia 54.34
in training during study start-ups.89 Governments have been actively
Shantha Biotech 53.68
promoting biotech research initiatives
and are targeting revenues of US$5 Jubilant 52.60
Some Indian pharma companies are
already developing a reputation for billion by 2010 -11.94 The leading Source: Biospectrum – ABLE, 2009 95
a nimble, rapid approach to clinical domestic players include Serum

testing that looks to streamline the Institute of India, which focuses on research and development. The
clinical trial process and bring new immuno-biologicals and vaccines; DBT has also drafted the National
drugs to market faster. For example, Biocon, which concentrates on Biotechnology Regulatory Act in order
Glenmark now routinely looks to recombinant DNA technologies, to set up the National Biotechnology
incorporate “proof of mechanism” into bioprocesses, fermentation-based Regulatory Authority (NBRA). The NBRA
every phase–I study.90 Most pharma small molecules and enzymes; and is expected to be an autonomous body
companies save this step for phase–II. Panacea Biotec, which specialises in formed specifically to regulate the
novel drug delivery techniques and biotechnology segment and reduce
But the most obvious benefit of pharmacogenomics (see Table 3). regulatory overlap.96
conducting clinical trials in India is the
potential for cost savings. Clinical trials Several initiatives have been launched Further funding support from the
account for over 40% of the costs of by the Government to give impetus Government will be critical in ensuring
developing a new drug.91 In terms of to the thriving biotech industry. The continued growth in the biotech
cost efficiency, India offers substantial Biotechnology Industry Partnership industry. The Government can play a
advantages – the cost of conducting Programme (BIPP) has been launched vital role in funding incubation and early
a trial here is lower by 50% than in the by the Department of Biotechnology stage ventures.
United States.92 The federal Government (DBT) to support high-end
is alive to the strength of this argument. biotechnology research programmes A growing biotech industry should
Drugs and materials imported for clinical capable of generating globally help India to gain a share of the global
trials are exempt from customs duties. recognised intellectual property. It opportunity currently emerging around
Clinical trials also remain exempt from specifically focuses on transformational biosimilars. The biosimilars market is
likely to grow by around US$2 billion glaritus. DRL has already launched
by 2014, to reach a total of US$19.4 filgrastim and rituximab in emerging
billion, following key patent expiration markets and has a pipeline of 10
for epoetin alpha, filgrastim, interferon biogenerics in various stages.104 The bottom line:
beta 1a, interferon alpha, human growth
hormone (hGH), and insulin-glargine.97 The challenge for the development of India’s developing
This represents a CARG of 89.1% from
2009 to 2014. All told, around US$25
biosimilars arises from the fact that
biologics are more complex than small
biotech industry
billion worth of biologics are expected
to go off patent by 2016.98 These
molecules and chemically synthesised
drugs; therefore their replica are – in
and cost
patent expirations open the route for contrast to ‘traditional’ small-molecule advantages
biosimilars, the equivalent of generics generics – ‘similar’ but not identical to
for biologics. the original drug. Consequently, the should drive
Indian biotech companies are slowly
registration of biosimilars requires more
data than is required for generics, and significant
building capabilities in development
and manufacturing of biosimilars. Intas
manufacturers have to demonstrate
efficacy and safety in pre-clinical
growth in local
Biopharmaceuticals is now developing
a biosimilar of a protein used to treat
and clinical studies. This makes the
registration of biosimilars a costly and
development of
the side effect of cancer therapy, time-consuming process, and lessens biosimilars for the
for example.99 Biocon has initiated the chances of a successful launch.
registration of its human recombinant Developing biosimilars is costlier than global market.
insulin with the European regulatory developing chemical based generics,
agency, EMEA and intends to launch it requires a greater capital investment
by 2011.100 Reliance Life Sciences has and operating costs of manufacturing
launched three biosimilars—ReliPoietin are higher. These factors mean that
(Erythropoietin), ReliGrast (GCSF), developing biosimilars represents a
and ReliFeron (Interferon Alpha 2b) in higher risk area of R&D.
the domestic market in 2008 and is
currently conducting clinical studies Pharma companies need to balance
for erythropoetin and granulocyte the risks and rewards when considering
colony stimulating factor (GCSF) in whether to enter the biosimilars
Europe.101 Wockhardt has launched market. The decision to enter the
its recombinant erythropoietin, Wepox market should only be made based on
and insulin, Wosulin in the domestic a clearly defined long-term biosimilar
market102 and is conducting clinical strategy, including development and
trials in the US for Wosulin.103 It has built manufacturing capabilities, marketing,
capacities in erythropoetin, hepatitis pricing and regulatory expertise. India’s
vaccine, recombinant insulin and insulin cost advantages in many of these areas

Other growth areas
could help it gain a stronghold globally companies are integrating bioinformatics

in this growing market. services into a complete portfolio of
Bioinformatics in India research capabilities.
The bottom line: India is now actively targeting the
India’s existing The modern process for drug discovery

and testing now generates very large
bioinformatics market, with the
construction of its first biotech-IT park
knowledge quantities of data through computer in Bangalore, at a total cost of about
US$87 million.106 The first phase of the
modeling and simulations, genetic
capital in IT sequencing, and other data-intensive park has been completed and a tender for
processes. Further, as we noted in Pharma the development for phase–II is expected
provides a natural 2020: The vision, pharma companies are soon from the local state Government.
Several Indian companies, including the
base for the under increasing pressure to document
the efficacy of their products; tracking Bangalore based Strand Genomics and
development of patient outcomes represents a further

source of large quantities of data. In order
Ocimum Biosolutions, have already made
forays into the bioinformatics industry.
bioinformatics to facilitate the storage, management, Recently, Ocimum was granted a patent
for its method and system to manage
retrieval and analysis of this large pool
research and of data, a new subsector of the IT sector and query gene expression data based
has emerged – bioinformatics. Tools have on quality.107
operations. been developed which can help lower
cost, improve efficiency, and streamline The Institute of Bioinformatics has also
the process of documenting a drug’s developed a comprehensive database
efficacy throughout development until of all known human proteins and their
launch and beyond. characteristics, and the Centre for
DNA Fingerprinting and Diagnostics in
India’s strength in the IT sector and its Hyderabad along with Sun Microsystems
growing pharmaceutical sector are driving has operationalised a Centre of
growth of this emerging area. Revenues Excellence focusing primarily on medical
for the Indian bioinformatics industry bioinformatics.108 Some global pharma
were around US$48 million as of March companies are already drawing on the
2009. It is an export driven segment with emerging resources. Tata Consultancy
earnings of around US$37 million from Services has signed a deal with GSK
overseas. Domestic revenues contribute to set up a support centre in Mumbai
around US$11 million.105 Some companies for the company’s global drug
provide only specialised bioinformatics development programme. Biocon has
services; in other cases, local life sciences taken its tie-up with Bistol-Myers Squibb
further by setting up a dedicated the National Centre for Cell Sciences in
research facility, through its subsidiary Pune and the National Brain Research
Syngene International. Centre near Delhi, are investigating the
Stem cell research

use of stem cells to regenerate nerve, The bottom line:
heart and adult muscle cells, and repair
damaged bone tissue. The L.V. Prasad India has made
Stem cells are seen by many as a
powerful tool for improving the research
Eye Institute has also treated blindness
using stem cells derived from the eye.
considerable
and development process in the pharma
industry. Stem cells are being used to While the Indian Government is strongly
progress in stem
develop some types of direct therapeutic
applications; they are also becoming
promoting biotech generally, concrete cell research
Government funding for stem cell
increasingly important as a tool to test research in India still lags far behind and is well-
potential drug toxicity. that provided in other countries such
as the US. There are also no laws positioned to
India has already made considerable
progress in this area. India’s entry into
per se governing stem cell research,
although there are specific guidelines
leverage growing
stem cell research has progressed
from a few institutions to currently
which classify stem cell use into three
categories: permissive, restricted,
capabilities in this
over 40 institutions and hospitals
involved in stem cell research.109 In
and prohibited. The Indian Council of area.
Medical Research is currently drawing
2008, Stempeutics, a leading stem up plans for a national stem cell
cell company, launched its second initiative to promote clinical applications
stem cell laboratory on the Manipal of stem cell research in ophthalmology,
University campus for advanced stem cardiology and spinal cord repair,
cell research in human embryonic stem and build links between scientists
cells.110 Further activities followed in and doctors. India’s ex-president Dr.
2009 – one example is a joint venture A.P.J. Abdul Kalam had also identified
formed by StemCyte in India with Apollo stem cell research as one of the
Hospitals and Cadila Pharmaceuticals areas on which the country should
to provide stem cell therapies.111 Several focus its efforts.
major research institutes, such as the
National Centre for Biological Sciences Given India’s growing presence in
in Bangalore, the Centre for Cellular biotech, drug discovery, and clinical
and Molecular Biology in Hyderabad, testing, the country may be well

positioned to take a leading role in about 50-60%, implantable devices
leveraging the potential of stem cell which are around 20-30%, and simple
technology throughout the pharma plastic disposables which are
The bottom line: value chain. around 20%.
Medical devices Medical devices The sector became regulated in 2005
under the Drugs and Cosmetics Act.
represent a Many pharmaceutical companies The Ministry of Health and Family
Welfare declared 10 products to be
such as Bayer Healthcare, Johnson
significant and Johnson Medical India (JJMI), classified and listed as drugs under the
Act. The list was expanded in March
potential market, Roche, and Piramal Healthcare are also
looking to medical devices as a path 2009 to include 19 more products.
Under the Act, import registration
however the to growth. The Indian medical devices
and supplies market is at a nascent requires product approval from another
sector currently stage and was estimated at US$2.75 country’s regulatory organisation such
as the US FDA or the EU medical
billion in 2008. This is about 1.25% of
lacks the the global medical devices and supplies devices directive.114 The manufacture
of any new type of a medical device is
market of around US$220 billion in
regulatory and 2008. By 2012, India’s medical devices not covered under the Act and requires
approval from an expert committee put
R&D support market is expected to nearly double to
around US$5 billion.112 Improving health together for the purpose.
necessary to infrastructure such as an increasing

number of hospitals, clinics and In contrast to other biotech-related
achieve its clinical laboratories and telemedicine areas such as stem cell research and
bioinformatics, the medical devices
services are expected to drive demand.
full potential The production of low value medical sector lacks the necessary regulatory
and R&D support. Institutional support
supplies and disposables is dominated
and faces stiff by domestic manufacturers, whereas is also required for testing and validating
facilities, as well as human resource
competition the high end medical equipment is
generally imported.113 The sector
from Europe and consists of the large medical-dental-
surgical equipment segment which is
China.
Global Pharma’s evolving
business models and
options in India
development. In the future the industry boundaries. It aims to get better

is expected to face stricter regulation access to innovation, reduce its costs,
and competition from Europe as well
as China.
manage its risks effectively and
improve productivity.
The bottom line:
Background This evolution in pharma business
Global pharma
The global pharmaceutical industry is
models has enormous repercussions players can take
for the Indian pharmaceutical sector,
changing. In a report by PwC Pharma and related sectors like biotechnology. advantage of a
2020: Challenging business models, Indian companies now have an
we describe how the pharmaceutical unprecedented opportunity to variety of options
business model is witnessing a
paradigm shift from a fully integrated
partner with global players across
a wide range of activities, from
to maximise
company structure towards a future
where companies use a wide range
contract manufacturing and licensing
arrangements, to franchising and
their investment
of outsourcing, partnership initiatives
and other contractual and relationship
joint venture opportunities. The range in India. As
of option spans a wide spectrum
arrangements to create networks of of levels of ownership and control, many pharma
collaboration and discovery. Eli Lilly, from straightforward outsourcing
for example, is currently transforming of manufacturing to licensing companies
itself from a traditional fully integrated
pharmaceutical company into a fully
arrangements to more involved joint
ventures and partially or wholly-owned
turn to more
integrated pharmaceutical network,
in order to leverage on a wider range
subsidiaries (see Figure 5). The amount
of investment risk varies accordingly.
collaborative
of resources beyond its physical business models,
Indian companies
Figure 5 : Evolving business models
are likely to play
E.g. Cipla ,
an increasingly
DRL, Dishman
and GVK
important
E xport
Oriented
partnering role.
In-licensing - e.g.
Into India-e.g. Pf izer, B us ines s - Elder - Enzymotec,
GlaxoSmithKline C R AMS Elder - Daiwa;
and Novartis Lupin -ItalFarmaco
Partially or
wholly owned L icens ing
subsidiaries Evolving
From India - Out -licensing - e.g.
e.g. Dishman, Business
Models Ethypharm - Solvay;
Glenmark,Orchid Glenmark - Forest,
and Aurobindo Glenmark- Teijin
Joint Franchising
Ventures
E.g. Novavax- E.g.
Cadila; Novotech Fortis Healthcare,
- ETI Klinical Medicine Shoppe

Big Pharma is already well aware of Table 4: Only two foreign multinationals rank among the top 10 pharmaceutical
India’s importance. Many of them companies in India
have been sourcing products from
Indian manufacturers for some years, Country sales, Country sales, Growth, 12 months
but have now started setting up their 12 months 12 months to Q4 2008/2007,
own production facilities. Sandoz, Major pharma to Q4 2008, to Q4 2007, Fixed rate US$(%)
the generics arm of Novartis, has two company US($millions) US($millions)
manufacturing plants and a research Cipla 510 468 9.0%
centre for developing formulations Aurobindo 477 416 14.5%
and processes, based in Thane, Sun Pharmaceuticals 449 340 31.9%
near Mumbai. Pfizer also operates a
Piramal Healthcare 428 354 20.9%
manufacturing base in Thane. GSK
has facilities based in Mumbai and GSK 399 395 1.2%
Nashik; Apotex has a research centre Ranbaxy (Daiichi) 368 385 -4.5%
and manufacturing plant in Bangalore; Cadila Healthcare 357 324 10.4%
and Teva has an R&D centre in
Lupin 286 261 9.2%
Greater Noida, having already bought
Dr. Reddy’s 232 218 6.3%
a manufacturing operation in Uttar
Laboratories
Pradesh in 2003. Mid-tier global pharma
companies are present as well – Watson Glenmark 134 146 -8.5%
Pharma, Lonza, Eisai Pharmaceuticals, Source: Annual Reports (2009) & Company Reports
115
Ethypharm and Astellas all have

manufacturing or research facilities in activities such as APIs and generics, all relevant regulatory frameworks
India. While their presence is certainly and India continues to play an important continues to be a challenge when
on the increase, only two foreign role in these segments. outsourcing to Indian pharmaceutical
multinationals rank in the top 10 Indian In recent years, India’s pharma players, although the situation
companies, measured by sales – and companies have also begun to move is improving.
even they only have 6.4% of the market up the value chain. Foreign companies
between them (see Table 4). are now increasingly tapping India’s Licensing
growing research skills in addition to
Export-oriented business: its manufacturing skills. Players such
Multinationals are also striking licensing
CRAMS as Dishman and GVK-Biosciences
agreements to get a share of the
undertake contract research for western
Indian pie. For example, Elder
companies. Low costs, availability of
Outsourcing has been the traditional Pharmaceuticals has entered into
skilled talent and a large patient pool
method of doing business with Indian an exclusive in-licensing deal
continue to be growth drivers for the
companies. Historically, the focus for with Israel’s Enzymotec to sell the
CRAM segment in India. Ensuring that
the pharmaceutical industry has been latter’s cholesterol-reducing dietary
products and research comply with
on lower value add manufacturing supplement, CardiaBeat, in India.116
Elder has also entered into another deal the master franchisee of US-based development can be productively
with Daiwa Pharmaceutical of Japan Medicine Shoppe International has utilised by western pharmaceutical
to introduce Daiwa’s nutraceuticals already forayed the market and plans companies coming into India. As noted,
into the Indian markets.117 Lupin has to expand 1,000 stores by 2010.122 India is home to more then 100 US FDA
in-licensed Lupenox, a cardiovascular Fortis Healthcare plans to open a chain approved plants, so foreign companies
drug from ItalFarmaco, an Italian of 1,000 stores by 2012, of which the looking for local partners can access a
pharmaceutical company.118 US$200 million has been committed.123 substantial manufacturing base.
Franchising arrangements can
In recent years, a wide array of out- leverage on purchasing power from the R&D joint ventures are also growing
licensing arrangements have also franchisor buying in large quantities and in popularity. Some Indian companies
emerged. Ethypharm out-licensed passing down savings to franchisees. are collaborating with overseas players
and entered into a supply agreement Continued business support from to enhance their vaccine development
for Mesalazine with Solvay Pharma.119 the franchisor such as technology, capabilities, for example. Panacea
Glenmark has out-licensing deals with products, training and marketing is Biotech has a joint venture with Chiron
Forest, Teijin, Eli Lilly and Merck & an added advantage. However, there for development and marketing of
Co.120 Claris sealed a deal with Pfizer are restrictions on how the business vaccines.124 Similarly, Novavax and
to license out 15 injectable generic must be managed in order to retain Cadila Pharmaceuticals have a joint
medicines for pain, infections and consistency among franchises. All venture for the development and
other conditions.121 franchisees are obligated to conform manufacture of vaccines and other
accurately to the initial business model. biopharmaceutical products in India.125
Most developmental costs are borne by
the licensor in licensing arrangements, Joint Ventures Other joint ventures focus on biotech
resulting in the licensee paying a high or new biosimilars technologies.
unit cost and having little control over Novavax and Cadila Pharmaceuticals
Joint ventures (JVs) are becoming
manufacture. However, licensing can be signed an agreement in March 2009
a more prevalent option for
effectively used to establish a common to form a joint venture, CPL Biologicals.
companies looking to capitalise on
platform in order to gain rapid in-market CPL will develop and manufacture
the opportunities presented in India.
acceptance and create a complete vaccines, biological therapeutics
Foreign companies are increasingly
therapy range through arrangements and diagnostics in India using
looking at local partners to work with
such as cross-licensing. technology contributed from Novavax
in order to increase their presence
and Cadila Pharmaceuticals.126
in India. Domestic partners bring
Franchising together extensive local expertise due
Clinical testing also offers opportunities.
to their familiarity with the business
In 2009 Novotech, an Australia based
India’s retailing industry also offers huge environment, knowledge support and
clinical research company, entered into
opportunities for foreign companies to the networked capabilities of other
a strategic venture with ETI Klinical
either set up their own retail franchisee local pharmaceutical companies. These
to service the growing demand for
or enter into collaboration with existing advantages, along with low production
clinical research and clinical and data
players. Medicine Shoppe India, costs, skilled labor and faster drug

management services in India.127 subsidiary Novartis India from 50.9%.129
Requirements of a JV Joint ventures offer many ways for Other companies are using local
partners to pool their Intellectual subsidiaries to set up their own sales
Foreign companies forming a JV Property (IP) and to share risks and and marketing organisations, either
in India can invest directly via rewards equally. These types of organically or through acquisitions. GSK
the automatic route i.e. no prior arrangements can be particularly has headquartered its wholly-owned
approval of the Government is attractive to biotechnology or national subsidiary SB Asia in India. Novartis has
required. Foreign direct investment
pharmaceutical companies who wish to two wholly owned companies in India
up to 100% is permitted in
pharmaceutical sector under the retain some control over development – Novartis Consumer Health Private
automatic route. In cases where and to sell the resulting product in Limited and Sandoz India Private
the foreign investor has an existing some markets, but who lack the ability Limited. Pharmacia India Private
venture or tie-up in India in the to undertake global development and Limited remained as a wholly owned
same field as on 12 January commercialisation. However, the profit subsidiary and was not consolidated
2005, prior Foreign Investment and/or sales split may be determined as with Pfizer India during Pfizer’s
Promotion Board (FIPB) approval is much by the companies’ relative market acquisition of Pharmacia.130
required. The FIPB generally grants strengths as by the value of their
its approval on the basis of a no
initial IP. Unlike in some other sectors,
objection certificate (NOC) from the
existing JV partner. fully owned subsidiaries in the
pharmaceutical industry offer little risk
Partially or Wholly owned
in terms of sharing critical data and
subsidiaries competitive advantage, as most are
subject to strong control by the parent
Some multinational companies have company. Pharmaceutical companies
also increased their stake in their Indian willing to have wholly owned operations
subsidiaries to take advantage of the in India can gain value from being
India opportunity. Pfizer has been able present across the value chain, from
to increase its stake in its Indian arm, drug discovery to clinical trials through
Pfizer India, from 41.2% to around to manufacturing. Other benefits may
72%.128 Similarly, Novartis AG has include tax advantages.
hiked its stake to 76.42% in its Indian
Practical concerns
Infrastructure would impose taxes at both federal and

state levels and differentiate between
goods and services. The new dual
Insufficient energy infrastructure and
inadequate transport infrastructure GST is designed to aggregate different The bottom line:
indirect taxes currently levied, in order
has historically posed challenges for
companies operating in India. The to simplify and integrate the current India offers
situation is definitely improving, as system of indirect taxation.
some attractive
the Government focuses attention
on infrastructure needs. The Indian India already offers a variety of tax
concessions to the pharmaceutical
tax benefits
infrastructure sector continues to be
viewed as an investment opportunity, sector, including tax holidays for for pharma
industrial operations established in
despite the global slowdown.
free trade zones or under-developed companies and
areas; deduction of profits earned from
In early 2009, the Indian Government
was reported to be mulling over a plan exports; liberal depreciation allowances; reductions in
to use part of its foreign exchange deduction of capital R&D expenditure;
and relief on all contributions
customs duties
reserves to fund certain forms of
infrastructure spending. It is also to approved domestic research
institutions. For pharma manufacturing
should also
keen to encourage public-private
partnerships (PPPs) in infrastructure units, there is an additional weighted help global
deduction of 200% for expenditures
development projects. The Union
Ministry of Health and Family Welfare, relating to in-house R&D.132 Further, manufacturers
recently, a new provision has been
along with the pharmaceutical industry
and airport developers GVK and GMR, added to provide 125% weighted compete in the
plan to set up dedicated cargo zones to deduction for expenditure incurred
towards outsourcing of R&D activities.
price-sensitive
handle the import and export of pharma
products.131 Such initiatives could spur
At present, foreign direct investment
Indian market.
substantial improvements in India’s
infrastructure over the medium-term. in manufacture of drugs and
pharmaceuticals including those
involving use of recombinant DNA
Tax environment technology is freely permitted up to
100% under the automatic route,
India is expected to implement a new i.e., without obtaining any prior
Direct Tax Code, pending approval, regulatory approval.
by April 2011, which should simplify
the existing tax structure. The new Of particular interest for pharma
tax code proposes a reduction in the companies may be the special
corporate tax rate from the current 30% economic zones (SEZs). In order to
to 25% and an unlimited carry forward incentivise the country’s export sector,
of business losses. A dual system the Government has formulated the
GST has also been proposed for April SEZ policy, which offers cost and tax
2010. The implementation of the new benefits. On the corporate tax front,
GST may face delays. The new system units set up in SEZs enjoy 100%

income tax exemption on export profits located in Andhra Pradesh, and four and exempted from CVD and special
in the first five years of operation, 50% in Maharashtra, as well as one on the additional duty. Specified inputs of
exemption for the next five years, and outskirts of Dehra Dun in Uttarakhand, orthopaedic implants and medical
50% exemption on the reinvested so global pharma companies have a equipment and devices such asassistive
export profits in the following five years. range of options. devices, rehabilitation aids, etc. are fully
Companies located in SEZ also benefit exempted from import duty.135 The 2009
from various Indirect Tax benefits such At this stage, it may also be pertinent -10 budget reduced the customs duty
as exemption from payment of Customs to note that the draft Direct Tax Code on import of influenza vaccine and nine
Duty; Excise Duty; Central Sales Tax Bill published by the Government specific life saving drugs and bulk drugs
and refund and exemption of presently does not provide for SEZ- used for the manufacture of such drugs
Service Tax. related incentive schemes. However, to 5%. This will better enable foreign
recent press releases suggest that drug-makers to sell products at a lower
Currently, SEZs must adhere to a the Finance Minister has identified price point and better compete in India’s
positive net foreign exchange proposed incentive provisions as one of highly price sensitive market.
obligation policy (i.e. where the total the areas for detailed examination prior
value of exports should be more than to finalisation of the Direct Tax Code.134 Counterfeiting
the total value of imports) under the
Import Export policy, in order to retain Overall, India offers a favourable
Counterfeit drugs have been a serious
SEZ status. A proposal has been environment as far as taxation policies
issue in India. The Organisation of
made to exempt pharma SEZs from for pharmaceuticals are concerned. In
Pharmaceutical Producers of India
this requirement.133 addition to the attractive tax benefits
(OPPI) has spearheaded various
for companies pursuing innovative
initiatives to combat the problem. It has
In an effort to attract companies to R&D in India, the recent budget 2010
conducted several seminars and worked
SEZs, some of these are located in -11 has provided certain benefits to
closely with the Ministry of Health to
modern industrial areas. The Jawaharlal pharmaceutical industry. In this budget,
develop policies for controlling the
Nehru Pharma City, India’s first and a uniform, concessional basic duty
production and sale of ‘spurious’ drugs.
largest pharma industrial estate, of 5%, countervailing duty (CVD) of
It has also published a series of anti-
includes a SEZ. The facility is located 4% with full exemption from special
counterfeiting guidelines for the industry
near Visakhapatnam, in close proximity additional duty has been prescribed on
as a whole. Surprisingly, a recent
to many chemical manufacturing hubs, all medical equipment, while the parts
nationwide survey conducted by the
and offers common infrastructure and accessories for manufacture of
health ministry, published in December
for resident pharma companies. these equipment has been prescribed
2009 finds a much lower incidence
There are three other pharma SEZs only the basic custom duty of 5%
of spurious drugs in the country than
previous industry estimates. It found the which will prolong the period required In December 2008, the Delhi High
prevalence of spurious drugs at 0.046% to issue a grant. It permits compulsory Court’s landmark judgment in
of all medicines sold to customers, in licensing in some circumstances other favor of Bristol-Myers Squibb, the
contrast to results of an earlier survey than national emergencies and public patent holder for the leukemia drug
funded by the WHO and undertaken health crises – provisions that could be Dasatinib, restrained Hetero Drugs
by the International Pharmaceutical abused for commercial gain. from manufacturing and marketing
Federation, which concluded that 3.1% generic versions of the drug. In the past,
of drugs in India were counterfeit.136 Further, patent rights for ‘mail box’ marketing approvals were sometimes
While such findings are a positive applications filed will only accrue granted by the DCGI independently
sign, companies should remain alert to from the date the patent is granted.138 of the patent status of the drug in
possible counterfeiting issues. Lengthy delays are common, as the question. The judgment establishes
Indian Patent Office lacks sufficient a link between patent and marketing
Intellectual Property Rights resources to process applications very approvals granted by the IPR office
rapidly. While a ‘mail box’ application and the DCGI.140
is pending, generic manufacturers can
The federal Government introduced
freely produce the same drug In June 2009, Novartis’ cancer drug
product patents for all industrial sectors
without fear of incurring any liability Glivec was not awarded a patent
under the Patents (Amendment) Act,
for damages. for lack of improved efficacy under
2005 – in line with the commitment
section 3(d) of the Indian Patent Act
India made when it signed up to the
Post 2005 India has made several and its high price as ruled by the
Trade-Related Aspects of Intellectual
amendments to better protect Intellectual Property Appellate Board
Property Rights (TRIPS) Accord in 1995.
intellectual property rights and enable (IPAB).141 The former justification has
This regulation aims to balance the
global pharma companies to bring since come under scrutiny. In August
interests of domestic and multinational
their patented products to India, 2009, the Government accepted the
drug makers. It represents a major
while protecting the interest of home recommendations of the Mashelkar
improvement on the previous rules, but
grown companies. The Satwant Reddy committee supporting patenting of
some issues remain. Firstly, it does not
committee’s report on data protection incremental innovation. The Mashelkar
apply to drugs patented before 1995.137
has recommended pro-patent report also pointed that efforts were
Copies of drugs patented between
amendments and data exclusivity for a required to provide drugs at affordable
1995 and the introduction of the law will
period of five years.139 The enforcement prices to the people of India and to
probably not be withdrawn.
regime is also changing, but the legal prevent the granting of frivolous
system is currently too overburdened patents and evergreening.
The Ordinance also allows third parties
for these improvements to be
to oppose an application for a patent,
immediately effective.

Conclusion
The Indian market is impossible to India’s pharma market is highly collaboration and discovery. Investing
ignore, given its economic prospects. fragmented and remains extremely in India will be a vital component of
Foreign companies view India as a price sensitive. Affordable healthcare this networked future. Companies
potential significant contributor of continues to pose a challenge, although that will be most successful in doing
future sales and are ramping up their there are a number of healthcare business in India will be those that are
investments in the country accordingly. initiatives by the Government underway most adept at managing and mixing a
India’s domestic market looks promising to improve the situation for India’s vast range of contractual relationships and
for global pharma looking to launch population. Indian courts and regulatory partnership strategies.
new products. The country’s growing authorities are very sensitive to pricing
capabilities in contract manufacturing, issues in making decisions around Some practical issues will need to be
R&D and clinical trials also make it a intellectual property. Pharma companies addressed, regardless of the business
preferred outsourcing partner for global coming into India may need to consider model selected. Infrastructure deficits
pharma at every stage of the value a differential pricing. They will need continue to exist, although some are
chain. So what strategy should foreign to evaluate access to medicines, a being addressed. Intellectual property
pharmaceutical companies eager volume-based pricing strategy and protection has improved substantially
to enter the country or expand their take into account gradually increasing but some holes remain. And while
existing operations adopt? per capita incomes to come up with the regulatory environment in India
acceptable price levels for their drugs. has improved substantially in recent
One approach is to call on India’s Global pharma companies will then years, the industry still faces a number
increasing expertise in biotechnology, need to decide how to manufacture of question marks. Finalisation of
bioinformatics and clinical testing. their products, and identify and develop Government policies around drug
Several overseas companies have strong local partners. price control, access to OTC drugs,
outsourced research and clinical trials tax policy, intellectual property
to Indian contractors, while others One way to build a presence in India protection and infrastructure spending
have entered into collaborative R&D may be through an increased presence is still pending.
arrangements to supplement their R&D in the OTC market. Promoting a range
productivity. Many foreign companies of OTC products could serve as means Nonetheless, India’s appeal is growing
have also already initiated research on of building brand awareness and as a rapidly in a number of respects. It
neglected diseases. We believe that source of new revenues. Indigenous has long been a formidable player in
many more will do so, as the patent producers dominate the generics pharmaceutical manufacturing, but
regime is strengthening. This will enable business, and about 97% of all drugs its socio-economic strengths provide
them to capitalise on the cost savings to sold in India are already off patent. The even greater grounds for optimism. If
be gained from shifting some research OTC market is, by contrast, relatively the economy outpaces that of every
activities to India, without jeopardising undeveloped. Indian consumers already other emerging country for the next
their most valuable intellectual property. pay privately for the lion’s share of their half century, as many commentators
healthcare, and the Government is too expect, large portions of the population
Another approach is to tap into the hampered by budgetary constraints will be able to afford modern medicines.
growing domestic market. Foreign to reverse this pattern. In future, then, India’s increasing scientific expertise
companies with a product portfolio it seems likely that access to OTC will also equip it to play a significant
spanning across different therapeutics medicines will be improved and the role in researching and developing
segments can look at bringing newer market will continue to expand. those drugs. It has a large pool of
products in India by entering into highly educated, English speaking
collaborative networks across the value The pharmaceutical business model scientists who can undertake research
chain, from sourcing and manufacturing is witnessing a paradigm shift, moving and conduct trials more cheaply and in
to marketing and distribution. These from a fully integrated company some cases faster than their Western
companies will have to understand structure towards a future where peers. These are major advantages in
how to get their product to market and companies use a wide range of a world where drug development
develop a realistic pricing strategy, outsourcing, partnership initiatives costs are soaring and getting to
particularly as India is still far away and other contractual and relationship market fast is vital.
from a widespread shift to an insured arrangements to create networks of
payer model.
Related reading
PricewaterhouseCoopers’ providers and patients, and the changes

Pharma 2020 series required to create a marketing and sales
model that is fit for the 21st century.
Pharma 2020: The vision Pharma 2020: Challenging

First in the series, the report highlights business models
a number of issues that will have a Fourth in the series, the report explains
major bearing on the industry over the why Pharma’s fully integrated business
next 11 years. The publication outlines models may not be the best option
the changes we believe will best help for the pharma industry in 2020 and
pharmaceutical companies realise the why more creative collaboration
potential the future holds to enhance models may be more attractive. The
the value they provide to shareholders paper also evaluates the advantages
and society alike. and disadvantages of the alternative
business models and how each
Pharma 2020: Virtual R&D stands up against the challenges
Second in the series, the report explores facing the industry.
opportunities to improve the R&D
process. This paper proposes that new Pharma 2020: Taxing times ahead
technologies will enable the adoption Fifth in the series, the report discusses
of virtual R&D and by operating in the implications changes to the
a more connected world, industry, business model and political and
in collaboration with researchers, economic trends may have on how the
Governments, healthcare payers and pharma industry is taxed. The report
providers, can address the changing focuses on the challenges ahead,
needs of society more effectively. but also shows how companies can
adapt their tax planning to support the
Pharma 2020: Marketing the future provision of outcomes-based healthcare
Third in the series, the report and remain competitive.
discusses the key forces reshaping the
pharmaceutical marketplace, including The entire Pharma 2020 series is
the growing power of healthcare payers, available for download at
www.pwc.com/pharma2020

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106. “Bangalore Helix to open on June 7”, op. cit.
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articles/90/ 3/news/14923
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111. Sonal Shukla, “Banking on Stem Cells”, ExpressHealthcare (May 2009).
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129. “Novartis raises stake in Indian arm to 76.42%”, Business Standard (June 25, 2009).
130. Rumi Dutta, “Pharma multinationals activating Indian arms”, Business Standard (February 01, 2005).
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accessed July 21, 2009, http://www.novartis.com/downloads /about-novartis/india-glivec-patent-case-faq.pdf

Acronyms
ANDA - Abbreviated New Drug Application GSK - GlaxoSmithKline
API - Active Pharmaceutical Ingredient GST - Goods and Sales Tax
BCG - Bacille Calmette-Guérin hGH - Human Growth Hormone
BIPP - Biotechnology Industry Partnership Programme IP - Intellectual Property
BPL - Below Poverty Line IPAB - Intellectual Property Appellate Board
CAGR - Compounded Annual Growth Rate IRDA - Insurance Regulatory and
CRAMS - Contract Research & Manufacturing Services Development Authority
CROs - Contract Research Organisations JJMI - Johnson and Johnson Medical India
CVD - Countervailing Duty JVs - Joint ventures
DBT - Department of Biotechnology NPPA - National Pharmaceutical Pricing Authority
DCGI - Drug Controller General of India NREGA - National Rural Employment Guarantee Act
DPCO - Drug Price Control Order NRHM - National Rural Health Mission
DPT - Diphtheria, Pertussis or Whooping Cough, OPPI - Organisation of Pharmaceutical Producers

and Tetanus of India
DRL - Dr. Reddy’s Laboratories OTC - Over The Counter
EMEA - European Medicines Agency PE - Private Equity
EU - European Union PPPs - Public-Private Partnerships
FCCBs - Foreign Currency Convertible Bonds PwC - PricewaterhouseCoopers
FDA - Food and Drug Administration R&D - Research and Development
FDI - Foreign Direct Investment RBI - Reserve Bank of India
FIPB - Foreign Investment Promotion Board SEZs - Special Economic Zones
GCSF - Granulocyte Colony Stimulating Factor SIA - Secretariat for Industrial Assistance
GIC - General Insurance Company TRIPS - Trade Related Aspects of Intellectual

Property Rights
GLP - Good Laboratory Practices
WHO - World Health Organisation
Territory industry contacts
Argentina Denmark Israel Singapore

Diego Niebuhr Torben TOJ Jensen Assaf Shemer Abhijit Ghosh
[54] 11 4850 4705 [45] 3 945 9243 [972] 3 795 4681 [65] 6236 3888
Australia Erik Todbjerg Italy South Africa

John Cannings [45] 3 945 9433 Massimo Dal Lago Denis von Hoesslin
[61] 2 826 66410 [39] 045 8002561 [27] 117 974 285
Ecuador
Belgium Carlos Cruz Japan Spain
Thierry Vanwelkenhuyzen [593] 2 2562 288 130 Kenichiro Abe Rafael Rodríguez Alonso
[32] 2 710 7422 [81] 80 3158 5929 [34] 91 568 4287
Finland
Bolivia Janne Rajalahti Korea Sweden
César Lora [358] 3 3138 8016 Henry An Liselott Stenudd
[591] 2 2408 230 [82] (2) 3781 2594 [46] 8 555 33 405
Johan Kronberg
Brazil (SOACAT) [358] 9 2280 1253 Luxembourg Switzerland
Luis Madasi Laurent Probst Clive Bellingham
[55] 11 3674 1520 France [352] 49 48 48 2199 [41] 58 792 2822
Jacques Denizeau
Canada [33] 1 56 57 10 55 Mexico Peter Kartscher
Gord Jans Jorge Luis Hernandez [41] 58 792 5630
[1] 905 897 4527 Germany [52] 55 5263 6106
Volker Booten Taiwan
China [49] 89 5790 6347 Netherlands Elliot Liao
Beatrijs van Liedekerke Arwin van der Linden [886] (2) 2729 6217
[81] 10 6533 7223 India [31] 20 5684712
Sharat Bansal Thailand
Chile [91] 22 6669 1538 Poland Zoya Vassilieva
Ricardo Arrano Mariusz Ignatowicz [66] (2) 344 1115
[55] 31 3269 1551 Indonesia [48] 22 523 4795
Eddy Rintis Turkey
Colombia [62] (21) 521 4048 Portugal Zeki Gündüz
María Helena Díaz Ana Lopes [90] 212 326 64 10
[57] (1) 635 1125 Mirza Diran [351] 213 599 159
[62] (21) 528 90950 United Kingdom
Nacira Lamprea Peru Andy Kemp
[57] 1 634 0555 Ireland Felix Horna [44] 20 7804 4408
John M Kelly [5] 11 211 6500
Czech Republic [353] 1 792 6307 United States
Radmila Fortova Russia Michael Swanick
[420] 2 5115 2521 Enda McDonagh Alina Lavrentieva [1] 267 330 6060
[353] 1 792 8728 [7] 495 967 6250
For further information, please contact:
Global India
Simon Friend Sujay Shetty
Partner, Global Pharmaceutical & Life Sciences Director, India Pharmaceutical & Life Sciences
Industry Leader Industry Leader
PricewaterhouseCoopers (UK) PricewaterhouseCoopers (India)
simon.d.friend@uk.pwc.com sujay.shetty@in.pwc.com
[44] 20 7213 4875 [91] 22 6669 1305
Steve Arlington Nisha Vishwakarma

Partner, Global Pharmaceutical & Life Sciences Advisory Manager, India Pharmaceutical & Life Sciences
Services Leader PricewaterhouseCoopers (India)
PricewaterhouseCoopers (UK) nisha.vishwakarma@in.pwc.com
steve.arlington@uk.pwc.com [91] 22 6669 1100
[44] 20 7804 3997
Michael Swanick
Partner, Global Pharmaceutical and Life Sciences Tax Leader
PricewaterhouseCoopers (US)
michael.f.swanick@us.pwc.com
[1] 267 330 6060
Marketing
Sara Solomon
Marketing and Business Development
Global Pharmaceutical & Life Sciences
PricewaterhouseCoopers (UK)
sara.solomon@uk.pwc.com
[44] 20 7804 1014
pwc.com/pharma
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this
publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this
publication, and, to the extent permitted by law, PricewaterhouseCoopers does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else
acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
© 2010 PricewaterhouseCoopers. All rights reserved. "PricewaterhouseCoopers" and "PwC" refer to the network of member firms of PricewaterhouseCoopers International Limited (PwCIL).
Each member firm is a separate legal entity and does not act as agent of PwCIL or any other member firm. PwCIL does not provide any services to clients. PwCIL is not responsible or liable
for the acts or omissions of any of its member firms nor can it control the exercise of their professional judgment or bind them in any way. No member firm is responsible or liable for the acts or
omissions of any other member firm nor can it control the exercise of another member firm's professional judgment or bind another member firm or PwCIL in any way.

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Pharmaceuticals and Life Sciences

Global pharma looks to India:

Domestic market overview 09

Growing Research & Development 15

Other growth areas 20

Global Pharma’s evolving business models and options in India 23

Global pharma looks to India: Prospects for growth 3

The Indian economy is worth about

Two factors underlie this favourable

Global pharma looks to India: Prospects for growth 5

Source: PricewaterhouseCoopers, 100%

11% 11% Gastrointestinal

15% 13% 13% Others

Global pharma looks to India: Prospects for growth 7

Background 2005 (see Intellectual Property Rights

Global pharma looks to India: Prospects for growth 9

Global pharma looks to India: Prospects for growth 11

Indian pharma The Indian contract manufacturing

Global pharma looks to India: Prospects for growth 13

Reaching the untapped rural Companies looking to access rural

Global pharma looks to India: Prospects for growth 15

Global pharma looks to India: Prospects for growth 17

a nimble, rapid approach to clinical domestic players include Serum

Global pharma looks to India: Prospects for growth 19

could help it gain a stronghold globally companies are integrating bioinformatics

India’s existing The modern process for drug discovery

development of patient outcomes represents a further

Stem cell research

Global pharma looks to India: Prospects for growth 21

necessary to infrastructure such as an increasing

development. In the future the industry boundaries. It aims to get better

Global pharma looks to India: Prospects for growth 23

Ethypharm and Astellas all have

Global pharma looks to India: Prospects for growth 25

Infrastructure would impose taxes at both federal and

Global pharma looks to India: Prospects for growth 27

Global pharma looks to India: Prospects for growth 29

PricewaterhouseCoopers’ providers and patients, and the changes

Pharma 2020: The vision Pharma 2020: Challenging

Global pharma looks to India: Prospects for growth 31

Global pharma looks to India: Prospects for growth 33

Global pharma looks to India: Prospects for growth 35

Global pharma looks to India: Prospects for growth 37

CVD - Countervailing Duty JVs - Joint ventures

DBT - Department of Biotechnology NPPA - National Pharmaceutical Pricing Authority

DPT - Diphtheria, Pertussis or Whooping Cough, OPPI - Organisation of Pharmaceutical Producers

DRL - Dr. Reddy’s Laboratories OTC - Over The Counter

EMEA - European Medicines Agency PE - Private Equity

EU - European Union PPPs - Public-Private Partnerships

FCCBs - Foreign Currency Convertible Bonds PwC - PricewaterhouseCoopers

FDA - Food and Drug Administration R&D - Research and Development

FDI - Foreign Direct Investment RBI - Reserve Bank of India

FIPB - Foreign Investment Promotion Board SEZs - Special Economic Zones

GIC - General Insurance Company TRIPS - Trade Related Aspects of Intellectual

Argentina Denmark Israel Singapore

Australia Erik Todbjerg Italy South Africa

Steve Arlington Nisha Vishwakarma

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